…the documents provided by the US Government did not fully comply with the legal requirements under Hong Kong law, the HKSAR Government has requested the US Government to provide additional information so that the Department of Justice could consider whether the US Government’s request can meet the relevant legal conditions. As the HKSAR Government has yet to have sufficient information to process the request for provisional warrant of arrest, there is no legal basis to restrict Mr Snowden from leaving Hong Kong.

The Chinese government made the final decision to allow Edward J. Snowden, the former National Security Agency contractor, to leave Hong Kong on Sunday, a move that Beijing believed resolved a tough diplomatic problem even as it reaped a publicity windfall from Mr. Snowden’s disclosures, according to people familiar with the situation.

Beijing can declare victory in the Snowden affair. Mr. Snowden’s hacking exposes make the Obama Administration look hypocritical and his continued flight from US justice makes it look incompetent and impotent, almost like a paper tiger might appear…

Today’s Links:

THE ESSENTIAL EIGHT

Commentary: Washington owes world explanations over troubling spying accusations – Xinhua Latest reports from Hong Kong-based South China Morning Post, which seems to have access to Snowden after he fled to the Chinese territory, revealed that Washington has hacked into the computer systems of major Chinese telecom carriers and one of the country’s top universities. These, along with previous allegations, are clearly troubling signs. They demonstrate that the United States, which has long been trying to play innocent as a victim of cyber attacks, has turned out to be the biggest villain in our age.

Related:Foreign Ministry Spokesperson Hua Chunying’s Remarks Q: Edward Snowden, former contractor for the US National Security Agency, has reportedly left Hong Kong on today’s flight to Moscow. The government of the Hong Kong Special Administrative Region (HKSAR) has released a statement on that. What is China’s comment? A: We have noted relevant reports but are not aware of the specifics. We will continue to follow its development. Hong Kong is ruled by law. On the basis of the Basic Law of the Hong Kong Special Administrative Region and the principle of “one country, two systems”, the central government always respects the HKSAR government’s handling of affairs in accordance with law. Q: As disclosed by the media, the US has hacked Chinese telecommunications companies and the Tsinghua University. How does China respond? A: We are gravely concerned about the recently disclosed cyber attacks by relevant US government agencies against China. It shows once again that China falls victim to cyber attacks. We have made representations with the US.

China’s conundrum – FT.com Interest rates on weekly interbank loans had approached 11 per cent on Thursday – up from only 3 per cent last month. Such rates, if sustained, could be lethal for many banks with businesses based on off-balance-sheet “wealth management products”…The PBoC’s initial refusal to ease interbank rates shows Beijing’s determination to stop the credit problem from becoming worse. But it was right to relent. If this is a ticking bomb, it must be defused not detonated.

Related:China PBOC Hints At Relief With Policy ‘Fine-Tuning’ Pledge | MNI The hint at a slightly easier policy stance follows an extraordinary week of trading in the interbank market in which the PBOC’s refusal to provide liquidity saw money market rates rise to record levels, fuelling global concerns about a financial crisis. The PBOC told the country’s banks early last week to cut their leverage ratios and shape up, MNI reported, while central bank officials said there are no plans to back down, despite mounting pressure to inject more funding. But monetary conditions are being tightened even as the economic slowdown appears to be deepening.

Related:【舒立观察】严把货币闸门是上策_杂志频道_财新网Hu Shuli not too worried about last weeks’ interbank fun, says right move by regulators, as long as now followed by financial reforms, and followed quickly, as the window is narrowing // 应该承认，近来国内银行间市场资金面紧张、股债齐跌，确实带来了心理和现实的冲击，部分市场利益者希望央行大量注入流动性“救市”的呼吁也非常强烈。然而，只要理性分析，即可知中国目前的问题根本不出在总量上。至今年5月底，央行数据显示M2同比增长已达15.8%，高于去年底确定的13%的年度指标，显示货币供应总量并不低。此次国务院常务会议的基调表明：当前的资金面紧张是短期性、结构性的，要靠机构自身调整行为去适应。央行将继续执行稳定货币政策。这是理性而明智的决定。毕竟，货币政策实施事关全局，绝不可为部分市场利益者的短期利益所绑架。特别是在当前国内外复杂的经济局势中，中国更应冷静应对，着眼长远，严把货币闸门正是上策。 诚然，对货币政策的坚守还需与改革措施相配套。此次国务院会议提出，货币政策要为结构调整、稳增长和惠及民生发挥更大作用，即稳中求进；其中又明确提出，实体经济却没有出现符合外界期待的增长，充分表明金融体系的效率有待提高。这意味着市场建设、增加金融工具、开放市场等多个维度的改革…从国际到国内，机会的窗口已经非常有限。在守住货币闸门之后，改革一定要出真招

Related:资金“地震”倒逼银行转变扩张模式 新华社——经济参考网last week interbank tightening in part a “real time stress test” by PBoC, which knows it can’t trust made up stress tests? // 尽管存在短期因素，但专家认为，此次“钱荒”的更深层次原因，还是与银行业无节制扩张有关。而央行坚决不放水，则意在迫使银行进一步改进流动性管理，并给一些银行快速的同业业务扩张敲响警钟… 国务院发展研究中心金融研究所副所长巴曙松认为，“短期金融市场波动检验金融机构流动性风险管理能力。以目前的货币市场运行机制，央行要熨平短期利率波动应属举手之劳，但是，波动本身对金融机构的流动性风险管理能力是一个体检，预期近期一些对流动性盲目乐观、对流动性风险管理准备不足的金融机构，会付出学费，特别是近期在同业市场期限错配显著的机构。”

Related:1.5万亿理财产品到期在即 流动性第二波冲击将至？_财经频道_一财网 1.5 Trillion RMB of WMPs coing dues by end of June, could be an interesting week…// 评级机构惠誉日前发布报告称，6月底前，中国商业银行将有1.5万亿元理财产品到期，银行间拆借利率将再度面临上升压力…前述券商研究人士认为，货币市场利率的高点已经过去了，再次超过原先高点的可能性很小。“税收集中上缴、准备金补交等因素叠加起来，再加上存款流失，是商业银行这次资金紧张的主要因素，但属于阶段性波动。这个时点过去后，情况应当会有所好转，而且如果资金面继续紧张到威胁金融安全的时候，央行肯定不会坐视不管。”他说。

China SignPost™ (洞察中国) #71—“Counting Cars: Rising Private Automobile Ownership in Chinese Cities Paves Road for Gasoline Demand” | Andrew S. Erickson “Texas-sized” used to be the benchmark for large-scale car ownership, but “China-sized” is emerging as the new metric. We assembled statistical data for 36 cities that account for 30% of China’s 93 million-strong private passenger car fleet and found that Metro Beijing now has more than four million private passenger cars. That’s 45% more passenger cars than are registered in Harris County, Texas, home to car-crazy Houston and several of its major suburbs. At present, no Chinese metropolitan areas other than Beijing have attained Houston’s raw car ownership levels, but three Chinese metro areas now each have more private passenger cars than New York City, with its 1.8 million cars

Anti-graft campaign claims another big fish–Guo Yongxiang | South China Morning Post According to their official profiles, Guo and former security tsar Zhou Yongkang worked together for 12 years, until 2002, when Zhou became a member of the Politburo as head of the Public Security Ministry. In 1990, Guo was working at the Shengli Petroleum Administration Bureau, which was then affiliated with China National Petroleum Corporation (CNPC), of which Zhou had already been deputy chief for two years.

Riot after Chinese teachers try to stop pupils cheating – Telegraph By late afternoon, the invigilators were trapped in a set of school offices, as groups of students pelted the windows with rocks. Outside, an angry mob of more than 2,000 people had gathered to vent its rage, smashing cars and chanting: “We want fairness. There is no fairness if you do not let us cheat.”

Amid China market stand off, calls for a more transparent central bank | Reuters Throughout, the central bank has remained silent. Several telephone calls from Reuters to the PBOC for comment went unanswered. To many market players, the episode highlights that it is time for the PBOC to shift away from its penchant for opacity in conducting its business. In the past that has included carrying out special market operations behind the scenes and announcing changes in policy interest rates out of the blue and with a minimum of explanation – often at odd hours of the day and at weekends.

The Empty City – An FP Slideshow | Foreign Policy In 2003, officials in Kunming, the capital of southern China’s Yunnan province, decided they needed more space to expand. So they started work on the district of Chenggong, a roughly 41 square-mile plot of land 11 miles south of the city. Chenggong, which means to “submit tribute,” features a Central Business District dotted with dozens of office towers, a massive government compound, and 15 university campuses. Ten-lane highways crisscross the city, rolling over previously tilled fields, while farmers living in surrounding areas face eviction. Perhaps the only thing Chenggong lacks, as I saw on a trip to the city in February, is people. The municipal government claims that the population reached 350,000 in 2012, and expects one million inhabitants by 2020. Considering that the city features rows upon rows of empty buildings, that seems unlikely.

Inequality in China: An Overview by John B. Knight :: SSRN This paper provides an overview of research on income inequality in China over the period of economic reform. It presents the results of two main sources of evidence on income inequality and, assisted by various decompositions, explains the reasons income inequality has increased rapidly and the Gini coefficient is now almost 0.5. This paper evaluates the degree of income inequality from the perspectives of people’s subjective well-being and government concerns. It poses the following question: has income inequality peaked? It also discusses the policy implications of the analysis. The concluding comments of this paper propose a research agenda and suggest possible lessons from China’s experience that may be useful for other developing countries.

POLITICS AND LAW

李克强“百日维新” 筑梦人路仍艰辛_中国_多维新闻网Duowei on Li keqiang’s first 100 days // 如今，失去制约的权力、渗入骨髓的腐败、官商勾结形成的特权阶级吞噬民间财富、公平正义缺失引爆的群体性事件等等正冲击着人民的社会道德基础，在这些危险组合的面前，现有的政府机器已被质疑难以安放中国梦。如何让中国这样一个庞大的国家机器适时调整到更为合适与现代的运转模式，是李克强未来十年难以绕开的。作为官僚机构的首脑，李克强似乎信心满满地要面对改革的各项挑战，但真的要直面这样一个庞大、甚至陈腐气息难逆的国家机器，他是否做足了热身，准备大干一场？

Party school dismisses rumor — Shanghai Daily CHINA’S Central Party School has denied an online rumor that an official was supporting an 18-year-old mistress. An online post named Lu Guangnian, director of a committee affiliated to the school’s Scientific Development Theory Research Institute. However, the school said on its official website that it didn’t have any official of that name and there was no such institute.

US ‘stole’ Chinese statistics | China Daily Cyberattacks on China that originate in the United States may be partly backed by the US government, Chinese experts have said, a situation they would like Washington to explain…”The scale and scope of US monitoring of China’s Internet information is shocking, it is beyond expectation,” said Jia Xiudong, a senior researcher of US studies at the China Institute of International Studies. “The US is the largest source of foreign cyberattacks on China. Now Snowden’s claims show that many such attacks may be backed by the US government.”

[视频]斯诺登披露美对华网络攻击更多细节_新闻频道_央视网Sunday CCTV Evening News on SCMP revelations of US hacking into Qinhua and SMSs // 报道援引斯诺登的话说，美国国家安全局曾入侵多家中国电信公司，并盗取数百万条用户短信。报道还说，美国曾“持续、高密度、集中式入侵”中国清华大学的网络系统。仅在今年一月的一天中，美国就曾入侵63台清华大学的电脑和服务器。中国骨干网之一的“中国教育和科研计算机网”总控中心就设在清华大学，它支持和保障了多项科研、教育类的国家重要网络应用项目。此外，美国还曾入侵亚太地区最大的高容量海底光缆系统提供商——亚太环通的香港总部计算机。该公司拥有区内最庞大的海底光纤电缆网络。

South Korea’s Park set to charm China, show up the North | Reuters When the presidents of China and South Korea meet in Beijing this week, they will likely use a rapport that blossomed eight years ago to find common ground on North Korea as well as seek ways to boost already vibrant economic ties. With her self-taught Mandarin and interest in Chinese culture, South Korea’s Park Geun-hye will get a warm welcome during a four-day state visit that begins on Thursday.

Police probe Hong Kong International School over expulsions for drug use | South China Morning Post Police are investigating Hong Kong International School after it expelled 11 students and disciplined others for drug use. The school, in Tai Tam, did not inform police of its actions. Last month administrators of its high school conducted an inquiry into violations of school policy about drug use. It was initially thought just a few pupils were found selling and using marijuana. But as the inquiry progressed, the number of teenagers involved grew. HKIS would not confirm how many had been expelled but a source with knowledge of the situation put the figure at 11.

Chinese Dissident Arrives in Taiwan – NYTimes.com The activist Chen Guangcheng, who fled house arrest in China and later moved to the United States, arrived Sunday in Taiwan, where he is to give several speeches expected to attract the attention of Beijing.

TECH AND MEDIA

Lenovo Playing Games in China to Challenge Samsung Phones – Bloomberg To offset falling PC sales and reduce its reliance on ThinkPad notebooks, Lenovo Group Ltd. (992) is adding a gaming service that the computer maker says can help it overtake Samsung Electronics Co. in smartphones in China. Lenovo Game World will include social-networking features, software reviews and gameplay tips when it starts in the third quarter, offering popular titles like “Fruit Ninja” for devices such as the computer maker’s Ideaphone K900 that run Google Inc. (GOOG)’s Android operating system.

Soccer fans despair as coach dumped – Xinhua | English.news.cn In the aftermath of a humiliating loss to a young Thailand side, coach Jose Antonio Camacho’s controversial relationship with the national soccer team finally came to an end with the Chinese Football Association deciding to terminate its contract with the Spaniard on Friday night. However, instead of Camacho being blamed for the poor result, Chinese netizens have accused the soccer body itself of being responsible for the national team’s misfortunes.

Mountaineers killed in Pakistan attack|chinadailyTwo Chinese mountaineers and one Chinese American were killed in a pre-dawn terrorist attack that claimed 10 lives in Pakistan’s northern Gilgit-Baltistan area on Sunday…Early Sunday morning, a group of gunmen dressed as paramilitary police stormed a base camp for the 8,125-meter snow-covered Nanga Parbat peak…Yang Chunfeng, a 45-year-old experienced mountaineer from the Xinjiang Uygur autonomous region, was confirmed as one of the two dead Chinese climbers. He was on his dream tour conquering the 14 independent mountains that are more than 8,000 meters above sea level in the Himalayan and Karakoram mountain ranges…The Pakistani government and the Chinese embassy have not yet released the other Chinese victim’s name, but sources on the Internet indicate that the other dead was 48-year-old mountaineer Rao Jianfeng from Shenzhen, Guangdong province.

Scientists warn against complacency on deadly H7N9 bird flu | Reuters “The warm season has now begun in China, and only one new laboratory-confirmed case of H7N9 in human beings has been identified since May 8, 2013,” the researchers wrote in a study published in The Lancet medical journal. But they added: “If H7N9 follows a similar pattern to H5N1, the epidemic could reappear in the autumn.”

Beijing landmarks safe in “Transformers 4”: production company – Xinhua The head of a Hollywood production company on Sunday denied online rumors that upcoming action film “Transformers 4” will include the destruction of Beijing landmarks. “Pangu Plaza is an extraordinary and iconic building that will make a memorable visual in the movie, especially set against the beautiful National Stadium, National Aquatic Center and Olympic Green,” said Marc Ganis, president of Jiaflix Enterprises in a written statement.

LA Times – As Beijing air pollution worsens, some American expats clear out After nearly two decades in Beijing, David Wolf knew it was time for a change when his 11-year-old son, Aaron, somberly asked him, “Dad, when you were growing up, did you ever have PE outdoors?”…Later this month, when school lets out, Aaron and his mother will move to Southern California for good, and Wolf begins a new way of doing his consulting work, splitting his time between Beijing and their new home at Channel Islands Harbor.

Yesterday’s newsletter wrote that “The US has indicted Edward Snowden and asked for his extradition from Hong Kong.” It should have read “charged”, not indicted. i corrected it immediately on Twitter and the web site, but once the newsletter is sent there is no getting it back. Apologies.